House lawmakers work to replace the hated H-1B lottery

Two U.S. House lawmakers are involved in a bipartisan effort to change how H-1B visas are allocated, moving away from a random lottery and using salary offers instead.

The legislation by Reps. Darrell Issa (R-Calif.) and Zoe Lofgren (D-Calif.) has not yet been introduced. It's uncertain whether it will be put forward anytime soon or whether this effort to reach a bipartisan agreement will stick. While staffers have met to discuss the bill, and Issa has indicated support for a joint effort, it has little chance unless Issa is firmly behind it.

Issa and Lofgren have been critical of H-1B wage rates. When it was disclosed that Southern California Edison workers were training their replacements, Issa said the case "appears to be an example of precisely what the H-1B visa is not intended to be: a program to simply replace American workers en masse with cheap labor from overseas."

Lofgren has cited problems as well. "We can't have people coming in an undercutting the American educated workforce," she said at a hearing several years ago.

Because this is a work in progress, no one would speak on the record. But multiple informed sources have sketched out the broad outlines of the legislation.

Today, the U.S. distributes 85,000 H-1B visas through a lottery, with the odds of winning roughly one-in-three based on current demand. There were 236,000 visa petitions submitted this year.

This legislation envisions distributing wages in a way that won't tilt the H-1B visa to high-wage regions, such as Silicon Valley, Seattle and the Northeast corridor. It would keep a four-tier prevailing wage system, which accounts for pay differences by region and skill.

For instance, the prevailing wage for a Level 1 database administrator in Los Angeles -- someone with basic, entry-level skills -- is $57,616. But the wage for a Level 4 employee, someone who is experienced and fully competent, is $108,992.

In comparison, the Level 1 prevailing wage for a database administrator in Louisville, Ky. is $45,115 a year, or about $12,000 less than a similar job in Los Angeles. At Level 4, the Louisville job pays $87,318 -- nearly $22,000 less than in Los Angeles.

In the emerging proposal, what matters is the wage level and whether the employer is paying above it. Employers offering 100% or 200% over prevailing wage level will be in the strongest position to get a visa.

A Kentucky employer offering a Level 4 wage for a certain skill, for instance, will compete against other employers offering Level 4 wages for that same skill, regardless of geography. Otherwise, high-paying Silicon Valley firms would have an advantage in the distribution.

The measure would likely have a carve-out for small business and start-ups.

The bill's authors hope that the legislation raises wages, overall, for H-1B workers. Fully half of the H-1B workers -- 52% -- are paid Level 1 wages, and 30% get Level 2 wages, according to a Government Accountability Office study.

This salary ranking approach mlight not eliminate the lottery in its entirety. Some percentage of visa petitions may offer similar salaries near the bottom of the distribution list. A lottery might be used to allocate those visas.

The bill would also raise the $60,000 salary that creates an exemption for H-1B dependent firms (mostly IT services firms that offshore work). The new wage level hasn't been set. H-1B-dependent firms can displace U.S. workers, provided they pay at least that wage. A master's degree also creates an exemption, but that would be eliminated.

Raising the $60,000 salary threshold might still leave the non-displacement exemption in place.

"The simpler fix would be to make all employers -- in all cases -- abide by good faith recruiting and non-displacement" rules, said Ron Hira, an associate professor of public policy at Howard University.

The bill also envisions eliminating per-country caps on green cards for advanced degree holders. The government sets a cap of 140,000 employment-based green cards a year, with no more than 7% from any single country. This has lead to long waiting times for people from China and India, where demand is the highest.

The reaction to any of these changes remains to been seen. Industry and visa critics will want to see details. Moreover, the Senate has been very active on H-1B issues, and lawmakers there have their own ideas and conflicts about what should be in a visa bill.

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